Asia Summary and Highlights 10 May

Asia Session

As USD/JPY hovers around 156 figure, we continue to hear jawboning from Japanese finance minister after the rally pause after three green days. The latest March Household Spending are showing positive domestic demand at +1.2% m/m despite still down 1.2% y/y. Private consumption has been a key driver for the Japanese economy and such should be supportive for Japanese economic growth. USD/JPY is up 0.18% at 155.69 with U.S. Treasury Yields outpace JGB yields.

Bloomberg reported that the U.S. is planning to impose sanctions on Chinese strategic sectors, including EV, batteries and solar panel. It looks like Biden is playing catch up on his hawkishness when a competition with Trump is close. Chinese equities are subsequently being outperformed by other regional indexes while U.S. indexes are pips in the green. AUD/USD are being dragged by such sentiment and slipped 0.19% to 0.6606, so as NZD/USD down 0.19% to 0.6023 while USD/CAD rose 0.06%. Else, EUR/USD and GBP/USD is down 0.07%. 

North American session

GBP/USD slipped to 1.2450 from 1.2490 on the BoE decision, where rates were left unchanged but Deputy Governor Ramsden joined Dhingra in voting for a cut, leaving a 7-2 count, and CPI forecasts were revised lower. EUR/GBP bounced to touch .8620.

A bounce in US initial claims to 231k, the highest since August, from 209k, sent the USD lower, and USD losses continued to build through the session with no correction. EUR/USD rallied 50 pips to 1.0780 while USD/JPY fell 40 pips to 155.50. GBP/USD moved up to 1.2525, more than reversing its post-BoE dip. AUD/USD moved well above .66 while USD/CAD fell well below 1.37.  Bank of Canada Governor Macklem stated that the Canadian financial system remained resilient after the BoC’s Financial Stability Report.